Microsoft announced its retail pricing plans for Windows 7 this morning. First, the good news: Contrary to rumors, the company is not raising prices. The bad news? It's not significantly lowering prices either. In fact, most versions of Windows 7 will simply cost exactly the same as their Windows Vista predecessors.

In the United States, three versions of Windows 7 will be widely available at retail: Windows 7 Home Premium, Professional, and Ultimate. Pricing for these products breaks down as follows:

  • Home Premium (Upgrade) - $119.99
  • Home Premium (Full) - $199.99
  • Professional (Upgrade) - $199.99
  • Professional (Full) - $299.99
  • Ultimate (Upgrade) - $219.99
  • Ultimate (Full) - $319.99
Windows 7 Home Premium is the only product that doesn't have the exact same pricing structure as the Vista equivalents. Windows 7 Home Premium (Upgrade) is $10, or 8 percent, cheaper than Windows Vista Home Premium (Upgrade). And Windows 7 Home Premium (Full) is $40, or 17 percent, less expensive than its predecessor. (Similar pricing is available in other markets as well.)

To help avert criticism, Microsoft and its retail partners will temporarily offer steep discounts on the Upgrade versions of Windows 7 Home Premium and Professional only. Consumers who preorder these products online between June 26, 2009 and July 11, 2009 in the United States and Canada will pay just $49.99 for Windows 7 Home Premium (Upgrade), a $70 discount, or $99.99 for Windows 7 Professional (Upgrade), a $100 discount. The deals will be made available at Amazon, Best Buy, Microsoft, and at other participating online retailers. Consumers in Japan, France, Germany, and the UK can also pre-order Windows 7 for similarly short timeframes, though the exact dates vary.

Microsoft also announced that it would allow consumers who purchase a Windows Vista-based PC between June 26, 2009 and January 31, 2010 to receive a free copy of Windows 7. Called the Windows 7 Upgrade Option Program, this program is global and completely free. Microsoft hopes it will address the problems caused by Windows 7 not shipping in time for the back-to-school PC selling season, which is currently underway.

The company also revealed that it will offer consumers in the European Union (EU) the Full versions of Windows 7 only through at least December 31, 2009, because of antitrust issues there which preclude it from bundling Internet Explorer with the OS. During this time period, EU users (excluding the UK) will be able to purchase the Full versions of Windows 7 at the Upgrade prices. Traditional Upgrade versions of Windows 7 will appear in the EU eventually, Microsoft says, at which point it will return to its usual pricing structure.

There's a lot more going on here, including a few pricing issues that have yet to be resolved. For more information, please refer to my Windows 7 Pricing article on the SuperSite for Windows